Fed Balance Sheet vs GDP RatioThis indicator tracks the size of the Federal Reserve’s Balance Sheet relative to the total US Economy (Nominal GDP). It serves as a primary gauge for systemic liquidity and the extent of monetary intervention in the markets.
How it Works: The script calculates the ratio between:
Fed Total Assets (FRED:WALCL) - The total amount of bonds and assets held by the Fed.
US Nominal GDP (FRED:GDP) - The annualized economic output of the US.
How to Read the Levels: I have plotted historical reference lines to help contextualize the current cycle:
🔴 35% (Pandemic Peak): The absolute high of monetary stimulus (2020–2022). This represents maximum liquidity, where the Fed "printed" massive amounts of money to support the economy.
🟠 ~20% (The "Danger Zone"): This was the range established after the 2008 Financial Crisis (2014–2019). Watch this level closely. In late 2019, when the Fed tried to push the ratio below ~18%, the banking plumbing broke (the Repo Crisis), forcing them to restart QE. We are currently approaching this level again.
⚪ 6% (Pre-2008 Normal): The historical baseline before the era of Quantitative Easing (QE) began.
Why This Matters:
Rising Ratio: Suggests the Fed is expanding liquidity (QE) faster than the economy is growing. Historically, this is a tailwind for risk assets (Stocks, Crypto).
Falling Ratio: Suggests the Fed is tightening (QT) or the economy is outgrowing the money supply. This represents a headwind for liquidity and risk assets.
Methodology Note:
Data Source: Federal Reserve Economic Data (FRED).
Calculation: No manual annualization is applied to GDP, as FRED:GDP is already reported as a Seasonally Adjusted Annual Rate (SAAR).
Pine Script® indicator






















